Pessimism on IMF Reforms

By Chen Weihua – November 21, 2014

China Daily

WASHINGTON – As experts descend on Washington to discuss global economic governance, some have expressed disappointment with the US Congress for blocking relevant reforms.

Jose Antonio Ocampo, former undersecretary general for economic and social affairs at the United Nations and now a professor at Columbia University in New York, said Thursday said he is “relatively pessimistic” about any action, even after the midterm elections earlier this month.

Ocampo called the 2010 reform rolled out by the International Monetary Fund and World Bank on quotas and voting rights the beginning of the reform process rather than the end.

Speaking at the Stimson Center in Washington, Ocampo, a former finance minister in Colombia, stressed the importance of a fair and well-represented international governance system that reflects world realities. He and other experts are in Washington to discuss topics of global economic governance and its role in security and justice.

The IMF Board of Governors approved a package of reforms in December 2010 for IMF’s quotas and governance. The reforms represent a major realignment in the ranking of quota shares that better reflects global economic realities, and a strengthening in the Fund’s legitimacy and effectiveness.

The reforms include unprecedented doubling of quotas and a major realignment of quota shares – a shift of more than 6 percent from over-represented to under-represented members and a more than 6 percent quota shift to dynamic emerging market and developing countries.

The 2010 IMF reform would make China the third largest member and also allow more of a say for emerging nations such as Brazil, India and Turkey to reflect their fast-growing economies.

But the US Congress has not ratified the reforms. It is the only country that holds a controlling share – 16.8 percent – of IMF votes. Major IMF decisions require 85 percent approval. Ocampo said that a coalition of countries can join together to exercise veto power.

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